Samurai Bonds

Samurai Bonds are bonds denominated in Japanese yen and placed by foreign issuers on the Japanese domestic market.

The name of the bonds emphasizes the peculiarities of Japanese culture: the term "samurai" in Japanese history refers to the military-feudal estate of sovereign princes (daimyo) and minor nobles.

Characteristics of Samurai Bonds:
• the issuer is not a resident of Japan;
• issue currency is Japanese currency - yen;
• they are placed with the help of underwriters from Japan;
• posting is regulated by Japanese law;
• can be freely purchased by non-residents of Japan.

Advantages:
• access to liquid capital from investors in Japan;
• interest of conservative Japanese institutional investors in investing in large foreign companies with an international presence and high credit ratings;
• ability to hedge currency risk.

Disadvantages:
• such bonds are the subject to double taxation for US issuers;
• complicated placement procedure and lack of flexibility in terms of placement.

Historically, American financial companies have been the main issuers of samurai bonds due to their popularity among Japanese investors. The governments of Asian countries, for example, Indonesia and Philippines, are also showing interest in the Japanese capital market and the issuance of samurai bonds.